For Immediate Release

Transcription

1 For Immediate Release REIT Issuer: ORIX JREIT Inc. (TSE: 8954) Teruo Ozaki Executive Director Asset Management Company: ORIX Asset Management Corporation Yoshitaka Kamemoto President and CEO Inquiries: Junko Kanazawa Director, Corporate Senior Vice President TEL: ORIX JREIT Announces Property Acquisitions ORIX Yodoyabashi Bldg. and Hamamatsu Act Tower and Change in Subsidiary Company of Asset Management Company TOKYO, March 1, 2016 ORIX JREIT Inc. ( OJR ) announced that our asset management company, ORIX Asset Management Corporation ( OAM ), passed a resolution on the property acquisitions and change in subsidiary company of OAM as described below. 1. Summary of Properties to be acquired Property Type Area (Note 2) Seller (Note 3) Acquisition Price (million yen) Appraisal Value (million yen) NOI Yield (%) (Note 4) Yield after Depreciation (%) (Note 5) ORIX Yodoyabashi Bldg. Office Other Areas (Osaka-shi) Sponsor 5,012 5, Hamamatsu Act Tower Office Other Areas (Hamamatsu-shi) Sponsor 11,800 12, Total 16,812 17, Existing Portfolio (Note 6) Notes: 1. Properties to be acquired refers to the each property or collectively to all the properties indicated above Central Tokyo Wards refers to Chiyoda, Chuo, Minato, Shinjuku, Shibuya and Shinagawa wards and Remaining Tokyo Wards refers to the remaining Tokyo wards other than the 6 Central Tokyo Wards. Other Parts of the Greater Tokyo Area refers to parts of Tokyo other than the 6 Central Tokyo Wards and Remaining Tokyo Wards, Kanagawa, Saitama and Chiba Prefectures. Other areas refers to areas other than the 6 Central Tokyo Wards, Remaining Tokyo Wards and Other Parts of the Greater Tokyo Area. 3. As to the Seller, Sponsor indicates ORIX Group. ORIX Group refers to ORIX Corporation and its group companies. 4. The "NOI Yield of Properties to be acquired is calculated by using the formula: Net Revenue in the direct capitalization method recorded in the appraisal reports at the time of decision to acquire / Scheduled acquisition price; the figures are rounded to the first decimal place. 5. The "Yield after Depreciation of Properties to be acquired is calculated by using the formula: ( Net revenue in the direct capitalization method recorded in the appraisal reports at the time of decision to acquire estimated depreciation assumed by OAM) / Scheduled acquisition price; the figures are rounded to the first decimal place. 6. Existing Portfolio refers to the properties owned as of August 31, 2015 added by the nine properties (DUPLEX GINZA 1/20

2 TOWER 2/11, VIA INN SHINSAIBASHI BLDG., HOTEL KEIHAN SAPPORO, Richmond Hotel Yamagata Ekimae, ARK Hills South Tower, KONAMI SPORTS CLUB KORIEN, KANDA MATSUNAGACHO BUILDING, Kita Aoyama Building and Aoyama Suncrest Building (Additional Acquisition)) acquired in/after the 28 th fiscal period ending February 29, 2016 and deducted by the two properties (The Kitahama PLAZA and Park Axis Azabu Stage). NOI Yield and Yield after Depreciation of existing portfolio are calculated based on the annualized actual figures for properties owned as of August 31, 2015 and the figures for the nine properties acquired after in/after the 28 th fiscal period ending February 29, 2016 are calculated based on the figures in appraisal reports at the time of acquisition. 2. Purpose of the Acquisition The current Japanese economy is beginning to show signs of recovery in terms of corporate performance and personal consumption, supported by the government s economic measures. Meanwhile, while the global economy is undergoing an improving trend overall, it is still stagnant, and inherent risks of downturn remain. Under such backdrop, competition to acquire properties is intensifying regardless of property types in Japan s real estate trading market, and the expected yield for all property types is continuing to compress. In the leasing market, vacancy rates of offices are declining, and rents are on the rise. These trends are also beginning to spread in regional cities. On the other hand, the timing and scale of full-fledged increase in rents remain difficult to predict as a result of factors such as differences in the improvement status of rental conditions depending on the individual characteristics of properties. In such real estate market, OJR will utilize its three strengths (characteristics) of i) being a diversified REIT, ii) ORIX Synergy (note 1) and iii) operational strength to respond flexibly to environmental changes and implement an ongoing external growth strategy based on the following investment policy. Invest selectively regardless of property types by utilizing the strength as a diversified REIT, extensive pipelines of the ORIX Group and expertise backed by ORIX Synergy while managing risks. Continue to consider property replacement by grasping the market environment. In addition, for gains on sales at the time of property replacement, we will work to reduce funding costs through early repayments and keep a portion as internal reserves to improve the stability of DPU. Under this backdrop, we will aim for the stable growth of unitholder value by leveraging our operational strength to effectively combine our external growth strategy, internal growth strategy, and financial strategy for the stable growth of DPU and NAV (note 2) in the future. Based on the above strategy, OJR has decided to acquire an office building in Osaka and a complex facility consisting mainly of office floors, as well as hotel and retail areas in Hamamatsu by utilizing the ORIX Group pipeline. Note: 1. The ORIX Synergy refers to the cooperative relationship between ORIX Group companies and OJR. 2. NAV (Net Asset Value) is calculated by the formula [unitholder capital + unrealized gain/loss + total internal reserve.] 3. Acquisition Summary 1) ORIX Yodoyabashi Bldg. Property to be acquired Acquisition price Contract date : March 1, 2016 : Real estate trust beneficial interest (Note 1) Scheduled acquisition date : May 2, 2016 Current owner and seller Funding method Payment term : 5,012,000,000 (excluding national and local consumption taxes, etc.) : ORIX Corporation Proceeds from the issuance of new investment units through public offering, : borrowings (Note 2) and cash on hand : 100% on delivery 2/20

3 2) Hamamatsu Act Tower Property to be acquired Acquisition price Contract date : March 1, 2016 : Real estate trust beneficial interest (Note 1) Scheduled acquisition date : April 15, 2016 Current owner and seller Funding method Payment term : 11,800,000,000 (excluding national and local consumption taxes, etc.) : Act City Investment Yugen Kaisha Proceeds from the issuance of new investment units through public offering : borrowings (Note 2) and cash on hand : 100% on delivery Notes: 1. The trust beneficial interest sale and purchase agreement for Properties to be acquired (the Purchase and Sales Agreements ) fall under the category of Forward Commitment, etc. as provided in the Comprehensive Guideline for Supervision of Financial Instruments Business Operators, etc. set by the Financial Services Agency as they are postdated Purchase and Sales Agreements where the settlement and delivery of the properties are to take place one month or more after the conclusion of agreement and such. Financial Impact on OJR in the Event that it Fails to Fulfill the Forward Commitment, Etc. In this regard, the Purchase and Sales Agreements have cancellation provisions that set forth the following conditions. i. When either the seller or the buyer breaches the provisions of the Purchase and Sales Agreement (such a party referred to as the Breaching Party ), the counterparty shall set a certain period and demand the Breaching Party to meet its obligations within the period. If the Breaching Party fails to correct its violations within that period, the counterparty shall be able to cancel the Purchase and Sales Agreement. ii. When either the seller or the buyer breaches the provisions of the Purchase and Sales Agreement, the Breaching Party shall be obliged to compensate or indemnify for the resulting damages, etc. of the counterparty within the scope of an equivalent cause-and-effect relationship. iii. After the conclusion of the Purchase and Sales Agreements, the seller confirms that the buyer is scheduled to acquire funds for the properties to be acquired by issuing additional investment units (the Acquisition Funds ) and if it is the case that the Acquisition Funds for the whole purchase price cannot be reached by the scheduled acquisition date (including cases where the buyer deems the issuance of investment units is unreasonable such as due to the fluctuation of the investment unit price or where it is reasonably assumed that it will not be reached), the buyer may unconditionally terminate the Purchase and Sales Agreements. 2. For details, please refer to the press release ORIX JREIT Announces Issue of New Investment Units and Secondary Offering of Units to be announced at a later date. The details of the borrowings shall be announced at a later date, as soon as it is determined. 4. Summary of Properties to be acquired (1) ORIX Yodoyabashi Bldg. Specified asset category Real estate trust beneficiary interest Trustee Term of trust agreement Scheduled acquisition date May 2, 2016 Acquisition price Appraisal value 5,220,000,000 Date of Appraisal February 1, 2016 Appraiser Address Mitsubishi UFJ Trust and Banking Corporation June 25, 2014 to May 1, 2026 (Scheduled) 5,012,000,000 (excluding national and local consumption taxes, etc.) Chuo Real Estate Appraisal Co., Ltd Kitahama, Chuo-ku, Osaka-shi, Osaka Public transit access Approx. 1-minute walk from Yodoyabashi Station on Osaka Subway Midosuji Line and Keihan Main Line Registered Area 1, m 2 including leasehold of 37.42m 2 Land Usage restrictions Type of ownership Building Registered usage Commercial zone Fee simple ownership and Leasehold Office, Retail, Parking, Storage 3/20

4 Registered completion date Type of ownership Registered Area Registered construction Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Earthquake resistance (with or without earthquake insurance) Previous owner (beneficiary) Scheduled Property Manager Collateral Special notes Special features of the property March 1991 June 2006 (Extension) Compartmentalized ownership section and co-ownership of compartmentalized ownership section (co-ownership interests : 96,040 of 100,000) Total floor area of whole building: 8,787.77m 2 Exclusive area: 6, m 2 including m 2 of co-ownership interests for parking, co-ownership interests of 96,040 of 100,000 (Note) The property is compartmentalized ownership and co-ownership of compartmentalized ownership section that comprises part of a building (the Compartmentalized ownership building ) and OJR will acquire an exclusive area of 6,753.12m 2 out of 6, m 2 of the Compartmentalized ownership building. Steel-frame, reinforced concrete, Reinforced concrete flat roof, 9 floors with 2 underground floors Murano Mori Architecs Office ASAI KEN Architectural Research Inc. (Extension) Murano Mori Architecs Office ASAI KEN Architectural Research Inc. (Extension) OBAYASHI CORPORATION Osaka City The Building Center of Japan (Extension) Elevator: 4 Parking: 23 vehicles PML (Note 1) 10% (without) (Note 1) (based on Sompo Japan Nipponkoa Risk Management, Inc. report) ORIX Corporation ANA FACILITIES CO.,LTD. (Scheduled) None <Arrangements, etc.> For the building, an agreement was signed between the landowners and unit building owners that jointly own the site (both include the trustee) stipulating that in the event of a transfer of exclusively owned space and the site ownership rights, etc. concerning the existing building, a preferential purchase right would be granted to other landowners and unit building owners concerning the building. In addition, the management regulations by the unit building owners stipulate that if a unit building owner of the Property s building transfers exclusively owned space, a preferential negotiation right shall be granted to other unit building owners. <Boundary check, cross-border structure, etc.> For the Property s jointly owned site, boundary finalization between the portion acquired by OJR and the portion owned by third parties has not been conducted. <Other> While unit ownership registration has been conducted that makes the trustee and other unit owners each independent owners, the dividing walls in the 7th floor leased office of the existing building that demarcate exclusively owned space have been removed. The office is favorably located approximately one minute-walk from Yodoyabashi Station on the Osaka Municipal Subway Midosuji Line and the Keihan Main Line, and is also within a walking distance from Kitahama Station on the Osaka Municipal 4/20

5 Summary of the Engineering Report Reporting Company Date of inspection Maintenance Cost Replacement Cost 2,583 million Subway Sakaisuji Line and Ooebashi Station on the Keihan Nakanoshima Line. The Yodoyabashi area is one of Osaka s representative business areas where major companies including financial institutions and public facilities are concentrated. This area enjoys stable office demand thanks to its name recognition as a traditional business area, and its excellent access to a broad region.yodoyabashi Station is located one station away with approx. 3-minute ride from Umeda Station ( Osaka Station), and four stations away with approx. 10-minute ride from Shin-Osaka Station via the Midosuji Line. This is a property developed through the acquisition of the adjoining land and the extension of the original building by the ORIX Group. The common areas and air conditioning equipment in the original building have been renewed. Efforts have been made to diversify the 30 tenants for the office section, which include tenants such as trading companies and IT companies, and stable operation can be expected in the future. The property also houses retail tenants including restaurants and a office supplies store at the lower floors, thanks to the bustling atmosphere due to its location over a station and the high level of visibility facing Tosabori Dori Street. Tokio Marine & Nichido Risk Consulting Co., Ltd. November 27, 2015 January 20, million (Total amount of 12 years from the date of inspection) (Note 2) (Note 2) Summary of Rental status (as of December 31, 2015) Number of tenants 32 Gross rental income 25 million per month (Note 2) Security deposits 232 million Total rent space 6, m 2 Total rentable space 6, m 2 Occupancy rate 94.9% Assumed net operating income (NOI) (Note 2) 242 million per annum (Note2) (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: 96.5% 2) Taxes: Taxes are calculated on the standard tax amount for fiscal Notes: 1. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 2. Figures are rounded down to the nearest million yen. 5/20

6 Photo and map 6/20

7 (2) Hamamatsu Act Tower Specified asset category Trustee Term of trust agreement Scheduled acquisition date April 15, 2016 Acquisition price Appraisal value 12,600,000,000 Date of Appraisal February 1, 2016 Appraiser Address Real estate trust beneficiary interest Mizuho Trust and Banking Co., Ltd. September 18, 2003 to April 30, 2026 (Scheduled) 11,800,000,000 (excluding national and local consumption taxes, etc.) Japan Real Estate Institute Itaya-cho, Naka-ku, Hamamatsu-shi, Shizuoka Public transit access Approx. 5-minute walk from the Hamamatsu Station on JR Tokaido Shinkansen (Bullet Train) and JR Tokaido Main Line Registered Area 12, m 2 Land Building Usage restrictions Type of ownership Registered usage Registered completion date Commercial zone Fee simple ownership Office, Hotel, Retail, Parking August 1994 April 1999 (Extension) Type of ownership Fee simple ownership Registered Area 142, m 2 Registered construction Architect Structural engineer General contractor Building inspection agency Main facilities and specifications Earthquake resistance (with or without earthquake insurance) Previous owner (beneficiary) Scheduled Property Manager Collateral Special notes Steel-frame, Steel frame reinforced concrete, flat froof, with flat roof, 47 floors with 2 underground floors NIHON SEKKEI INC., MITSUBISHI ESTATE CO., LTD. KAJIMA CORPORATION (Extension) NIHON SEKKEI INC., MITSUBISHI ESTATE CO., LTD. KAJIMA CORPORATION (Extension) Act City Construction Joint Venture KAJIMA CORPORATION (Extension) Hamamatsu City Elevator: 30 Parking: 530 vehicles (partially mechanical parking / whole of act City Hamamatsu : 933 vehicles) Office leased Area (Standard floor area): Approx. 1,980 m2 (Approx. 600 tsubo) Hotel guest rooms: 99 Single rooms, 38 Double rooms, 178 twin rooms, 7 Suite rooms PML (Note 1) 2% (without) (Note 1) (based on Sompo Japan Nipponkoa Risk Management, Inc. report) Act City Investment Yugen Kaisha MITSUI FUDOSAN BUILDING MANAGEMENT CO., LTD None <Arrangements> This trust agreement for the Property stipulates that in the event of transferring trust beneficiary interest, the beneficiary must submit proof of the result of consultation with Hamamatsu City to the trustee and gain approval. The Hamamatsu Station East Block Development Project 7/20

8 Special features of the property Agreement entered between Hamamatsu City, the initial trustee, Hotel Okura Co., Ltd., ITOCHU Corporation, UG Toshi-Kenchiku Co., Ltd., Nihon Sekkei, Inc., Kajima Corporation, Shimizu Corporation, and Takenaka Corporation related to development of Act City including the Property stipulates that if the Property is all collectively leased to a third party, the approval of Hamamatsu City must be obtained, and this arrangement shall be succeeded to OJR and the trustee. The pedestrian deck and connection bridge connected to the Building are owned and managed by Hamamatsu City, based on the Act City Management Agreement and Agreement on Management, etc. of Sidewalk Around Act City and the External Area on the First Floor that was entered between the initial trustee and Hamamatsu City. <Boundary check, cross-border structure> The carriage entrance eave on the land to the west side of the Property crosses the border of the Land. The arcade roof of the commercial complex portion of the Property crosses the border of the adjacent land to the northwest. The arcade roof on the building to the northwest of the Property crosses the border of the Land. The Property is a high-rise building directly connected to JR Hamamatsu Station that has 47floors above ground with a height of 212m, and is equipped with damping devices. As such, it has become a landmark of Hamamatsu city. It comprises office, hotel and commercial sections, and it has a track record of being managed utilizing the operational know-how of the ORIX Group in a wide range of property types. Hamamatsu city has a population of approx.. 810,000 people and is a government-designated city with a population second only to Nagoya-city in Chubu region. It has developed as a manufacturing city and has a concentration of head offices, plants, and R&D bases in the transportation equipment, textile, musical instrument, and advanced technology industries. It is located between Tokyo and Osaka, and is connected with the major metropolitan areas by the Tokaido Shinkansen, and the Tomei Expressway and Shin-Tomei Expressway. The Property is the tower building that serves as the core of the large complex Act City Hamamatsu that is directly connected to Hamamatsu Station. Act City Hamamatsu is a facility jointly developed by Hamamatsu City and private companies, and is composed of Act Tower, as well as a main hall, a concert hall, a congress center, an exhibition event hall, a seminar & exchange center, and a museum of musical instruments that are owned by Hamamatsu City. Synergies that are made uniquely possible by the various functions of a complex can be expected. In accordance with the acquisition of the Property, OAM will acquire 76% of the shares of the building management company who works as a facility manager of the whole of Act City Hamamatsu in order to manage the facility smoothly. (Hamamatsu City owns 24% of the shares.) For details of the building management company, please see 6. Profile of Subsidiary company of OAM. <Overview of office and commercial facilities> The office section on the intermediate floors consists of roomy spaces of approx. 600 tsubo or 1,980m 2, per floor (half floors have approx. 300 tsubo of space with no pillars). Flexible office layouts 8/20

9 Summary of the Engineering Report are possible as one floor can be subdivided into up to 20 sections with a minimum size of approximately 22 tsubo. An annex provides abundant parking, making it suitable for broad sales activities based from Hamamatsu. Flexible leasing incorporating a variety of tenant needs is possible. The property has excellent views as it is possible to view Hamamatsu city and Mt. Fuji from the floors. As the building has the largest scale and best location in Hamamatsu City and the status as a landmark, its scarcity value is high as an office that can improve tenants corporate image and effectiveness for recruiting employees. Approx. 140 office tenant companies are diversified in various sectors including finance, manufacturing, service, and IT, and stable high occupancy has been achieved. The majority of these are listed companies or their group companies, and some of the tenants are public institutions. Companies from outside the prefecture including foreign-affiliated companies account for 70% of tenants, making it a building that is used as a business base in Hamamatsu. The commercial area on the lower floors houses tenants such as restaurants, a culture center, language schools, as well as tenants catering daily needs such as convenience stores, a post office, and clinics. The stable occupancy of the office sector has led to improvement in the utilization of these tenants. <Overview of the hotel> Okura Act City Hotel Hamamatsu is located on the upper floors. The lessee, hotel management company, is Okura Act City Hotel Hamamatsu Co., Ltd. managed by ORIX Group. The property has high competitive advantages as a hotel thanks to its direct connection with a station where the Shinkansen (bullet train) stops, and being located within a complex. As a result, accommodation demand for events including weddings, academic conferences, and meetings can be expected. Business demand is high and inbound demand is also increasing. The hotel features roomy accommodations, even with single rooms that are approximately 23 m 2 or larger. Partially variable rent is going to be set as the rent in the contract. Internal growth can be expected through improvements in the room occupancy rate and average daily rate, or ADR. Hamamatsu city is located in the middle of the so-called golden route for foreign visitors between Tokyo, Osaka, and Mt. Fuji, and the total number of foreign guests has grown significantly. Reporting Company Tokio Marine & Nichido Risk Consulting Co., Ltd. Date of inspection December 15, 2014, February 24, 2015 and December 16, 2015 Maintenance Cost Replacement Cost 48,593 million Summary of Rental status 3,944 million (Note 2) (Total amount of 12 years from the date of inspection) (Note 2) Number of tenants (as of December 31, 2015) Office 138 Hotel 1 Retail 26 9/20

10 Office 148 million yen / month (Note2) (As of December 31, 2015) Fixed rent 22million yen /month (As of December 31, 2015) (Note a) <After the acquisition> A:Fixed rent + B:Variable rent -Break down- [A: Fixed rent] 279 million yen/year [B: Variable rent (Note b) ] GOP multiplied by 82% - fixed rent 279 million yen / year other rent besides the hotel section 27 (Note c) million yen / year Gross rental income Hotel Notes a. 5-year fixed lease agreement will be concluded between OJR and the lessee, hotel management company, upon acquisition. b. OJR will monthly receive 1/12 of the variable rent calculated by the above formula, based on GOP for previous financial year from April 1 to March 31. The variable rent for April through June will be paid in a lump sum in every June. GOP stands for Gross Operating Profit, indicating the amount deducting expenses relating to the hotel operations (personnel, utilities, advertising and other miscellaneous costs) from the amount of sales of the hotel. c. The lessee, hotel management company, has been renting a part of the office and retail in Hamamatsu Act Tower. Therefore, the valuable rent is calculated as deduction of the rents of a part of the office and retail. Security deposits (as of December 31, 2015) Total rent space (as of December 31, 2015) Total rentable space (as of December 31, 2015) Occupancy rate (as of December 31, 2015) Assumed net operating income (NOI) Retail 17 million yen / month (Note2) (As of December 31, 2015) Total 1,884 million yen (Note2) Office 41, m 2 Hotel 36, m 2 Retail 5, m 2 Storage m 2 Total 83, m 2 Office 42, m 2 Hotel 36, m 2 Retail 5, m 2 Storage m 2 Total 84, m 2 Office 98.6% Hotel Retail 95.7% Storage 100% 100% (Note) (Note) The figure does not indicate room occupancy rate. Total 99.0% 950million per annum (Note2) (Note) The net operating income (NOI) represents the assumed revenue/expenditure balance under stabilized occupancy, based on the terms of the lease contract, 10/20

11 etc. at the scheduled acquisition date, but excluding extraordinary factors that may occur during the first year of acquisition. The preconditions are as below; these figures are not what OJR expects for the current fiscal year. 1) Occupancy rate: Office: 95%, Hotel:100%, Retail:91% 2) Taxes: Taxes are calculated on the standard tax amount for fiscal Notes: 1. PML (Probable Maximum Loss) shows the ratio (%) of cost of recovering a building after it is damaged to its state before the damage occurred against replacement cost, when assuming an earthquake that may occur once in 475 years in average in probability statistics (recurrence interval of 475 years). The earthquake risk of a building is evaluated based on the event risk curve that shows the relationship of amount of expected loss (horizontal axis) and probability for the loss to exceed the year (vertical axis). However, the risk curve has variability because loss evaluation comes with uncertainties in earthquake resistance performance of the building, behavior of earthquake vibration, etc. Accordingly, the above PML figures use the risk curve with credibility level of 90%, and are rounded to the nearest whole number. 2. Figures are rounded down to the nearest million yen. 11/20

12 Photo Overview of Act City Hamamatsu 12/20

13 5. Profile of Previous Owner/Seller 1) ORIX Yodoyabashi Bldg. (as of February 10, 2016) Company name ORIX Corporation ( the Company ) Address Hamamatsu-cho, Minato-ku, Tokyo Representative President and CEO: Makoto Inoue Primary business Lease, installment sales and other financial services, real estate-related businesses, etc. Shareholders equity (as of November 30, 2015) 220,469 million Major shareholders (as of March 31, 2015) Japan Trustee Services Bank, Ltd. (trust account) Net Assets (as of December 31, 2015) 2,441,758million yen Total Assets (as of December 31, 2015) 11,064,619 million yen Date of establishment March 28, 1950 Relationships with OJR or its asset management company There is no capital relationship required for reporting between OJR and the Capital relationship Company. However, the Company is the parent company of OAM and falls under related parties of OAM as stipulated in the Act on Investment trusts and Investment Corporations (the Investment Trusts Act. ) Personal relationships 63 persons of the officers and employees of OAM are seconded from the Company as of January 31, Business relationships Applicability to related parties OJR acquired a property (acquisition price: 7,030 million) and preferred equity securities (acquisition price: 9,821 million) in the 27 th Fiscal Period ended August 2015 and three properties (acquisition price: 7,950) in the 28 th Fiscal Period ended February 2016 from the Company. The Company does not fall under related party of OJR. As mentioned above, the Company falls under the related parties of OAM as stipulated in the Investment Trusts Act. 2) Hamamatsu Act Tower (as of February 4, 2016) Company name Act City Investment Yugen Kaisha ( the Company ) c/o Tokyo Kyodo Accounting Office Address Marunouchi, Chiyoda-ku Tokyo Representative Executive Director Ryutaro Uchiyama Acquisition, holding, disposition, leasing and management of real estate and Primary business real estate beneficiary interests Shareholders equity 3 million Major shareholders Ippan Shadan Hojin Act City Not-disclosed Net Assets *Net Assets are not disclosed as the consent of the Company could not be obtained. Not-disclosed Total Assets *Total Assets are not disclosed as the consent of the Company could not be obtained. Date of establishment September 1, 2003 Relationships with OJR or its asset management company There is no capital relationship required for reporting between OJR and the Company. However, subsidiaries of ORIX Corporation, the parent company Capital relationship of OAM (a related party of OAM as stipulated in the Act on the Investment Trusts Act) have silent partnership investments in the Company. 13/20

14 Personal relationships Business relationships Applicability to related parties There is no personal relationship required for reporting between OJR or OAM and the Company There is no business relationship required for reporting between OJR or OAM and the Company The Company does not fall under related party of OJR. Furthermore, ORIX Real Estate Investment Advisors Corporation (a related party of OAM as stipulated in the Investment Trusts Act) is contracted to provide asset management for the Company. 6. Profile of Subsidiary Company of OAM to be Changed (as of February 4, 2016) Company name Act City Management Inc. ( the Company ) Address Itaya-cho, Naka-ku, Hamamatsu-shi, Shizuoka Representative Executive Director Etsuo Hoshino Primary business Building maintenance and management of Act City Shareholders equity 20 million Major shareholders ORIX Corporation(76%) / Hamamatsu-City(24%) Not-disclosed Net Assets *Net Assets are not disclosed as the consent of the Company could not be obtained. Not-disclosed Total Assets *Total Assets are not disclosed as the consent of the Company could not be obtained. Date of establishment June 1, 1994 Relationships with OJR or its asset management company There is no capital relationship required for reporting between OJR and the Company. However, ORIX Corporation, the parent company of OAM (a Capital relationship related party of OAM as stipulated in the Investment Trusts Act) has an investment in the Company. There is no personal relationship required for reporting between OJR or OAM and the Company. However, 6 persons are seconded from ORIX Personal relationships Corporation, the parent company of OAM (a related party of OAM as stipulated in the Act on the Investment Trusts Act,) and subsidiaries of ORIX Corporation as of January 31, Business relationships Applicability to related parties There is no business relationship required for reporting between OJR or OAM and the Company The Company does not fall under related party of OJR or OAM. The related person and related company of the Company do not fall under related party of OJR or OAM. 7. Information of previous Ownership (1) ORIX Yodoyabashi Bldg. Previous owner Owner before previous owner Company name ORIX Corporation Not a party having special relationship of interest Special relationships Refer to Section 5 Profile of involved Previous Owner/Seller above - Background to and reason for acquisition Development - Acquisition date March 17, Acquisition price Omitted, as previous owner held - property for over a year 14/20

15 (2) Hamamatsu Act Tower Previous owner Owner before previous owner Company name Act City Investment Inc. Not a party having special relationship of interest Special relationships Refer to Section 5 Profile of involved Previous Owner/Seller above - Background to and reason for acquisition Investment and management - Acquisition date September 30, Acquisition price Omitted, as previous owner held - property for over a year 8. Profile of Intermediary (All Properties) None 9. Transaction with Related-Party The following transaction has followed procedures in accordance with the Affiliated Company Transaction Regulations which are internal rules of OAM. Property Acquisition OJR will acquire ORIX Yodoyabashi Bldg. from ORIX Corporation and Hamamatsu Act Tower from Act Tower Investment Inc. For a summary of these related parties, please see 5. Profile of Previous Owner/Seller above. 10. Future Outlook With regard to impact on the financial forecast for the 29 th fiscal period (from March 1, 2016 through August 31, 2016) and the 30 th fiscal period (from September 1, 2016 through February 28, 2017) due to the property acquisitions, please refer to the press release ORIX JREIT Announces Revisions of Earnings & Distributions Forecasts for the 28 th Fiscal Period (Ended February 29, 2016) and the 29 th Fiscal Period (Ending August 31, 2016), and Earnings & Distributions Forecasts for the 30 th Fiscal Period (Ending February 28, 2017) announced today. 15/20

16 10. Appraisal Summary I. Appraisal summary (1) ORIX Yodoyabashi Bldg. Name of property ORIX Yodoyabashi Bldg. Date of Value Appraisal Value (In thousands of yen) Appraiser February 1, ,220,000 Chuo Real Estate Appraisal Co., Ltd. (In thousands of yen) Item Content Grounds Capitalization Method Valuation by the Direct Capitalization 5,220,000 5,440,000 (1) Gross Operating Revenue [(a)-(b)] 379,458 (a) Effective gross revenue 400,374 Assesed based on market standard (b) Vacancy loss 20,916 (2) Operating Expensed 129,941 Maintenance Expenses Assesed based on Building Management Agreement and actual 47,477 expenses Utility Expenses 30,191 Assesed in consideration of actual expenses Repair Expenses 791 Assesed based on the actual expenses of similar real estate Property Management Fee 5,328 Assesed based on the actual expenses of similar real estate Tenant Advertisement Cost 3,902 Assesed based on new rents for one month Tax and Public Dues 37,336 Assesed based on actual amount Casualty Insurance 941 Assesed based on building price multiplied by 0.1% Other Expenses 3,975 Recorded cost for leasehold of the building based on actual cost (3) Net Operating Income [(1)-(2)] 249,518 (4)Profit from Managing Security Deposit 4,546 Assesed based on the rent roll Recorded average amount of cumulative amount for 12 years for (5)Capital Expenditure 14,912 renewal costs in the engineering report multiplied by allocation rate (6)Net Revenue [(3)+(4)-(5)] 239,152 Assessed in consideration of real estate cap rate, transaction (7)Cap Rate 4.4% yield for similar real estate, interviews for investors and individuality of the subject real estate DCF Method 5,220,000 Assessed in consideration of real estate cap rate, transaction Discount Rate 4.2% yield for similar real estate, interviews for investors and individuality of the subject real estate Assessed in consideration of real estate cap rate, transaction Terminal Cap Rate 4.6% yield for similar real estate, interviews for investors and individuality of the subject real estate Cost Approach 3,780,000 Ratio of Land 72.8% Ratio of building 27.2% Any special considerations made in the reconciliation of estimated value Adopted Capitalization Method in reference to Cost Approach as demand for the subject real estate is considered mainly from investors who emphasize profitability 16/20

17 (2) Hamamatsu Act Tower Name of property Hamamatsu Act Tower Date of Value Appraisal Value (In thousands of yen) Appraiser Content Capitalization Method 12,600,000 Valuation by the Direct Capitalization Method 12,600,000 (1) Gross Operating Revenue [(2)-(g)] 3,207,200 (a) Rent Revenue 2,089,418 Office 1,632,259 Retail 181,408 Hotel (Fixed rent) 123,177 Hotel (Valuable rent) 148,342 Warehouse 4,232 (b)common Service Fees Revenue 372,075 (c) [(a)+(b)] Item (d) Utility Expense Income Office 174,921 Retail 40,352 Hotel 156,802 Warehouse 0 2,461, ,000 February 1, ,600,000 Japan Real Estate Institute Ground (In thousands of yen) Recorded the rent revenues including common service fees based on assessment of unit level of rents, etc. that can stably collected over the mid- to long-term, which was obtained based on the average rent calculated from the current lease agreements, rent levels assumed in the new leasing (both including common service fees), lease agreement to be concluded regarding hotel section and occupying end tenants' attributes. Electric charges for lighting, other equipment and air conditioning expenses for rent spaces are included in utility expense income in the case where the occupancy rate for rent spaces is 100% in consideration of the occupancy rate for rent spaces based on actual results in the prior fiscal year. (e) Parking Space Income (f) Others Revenue 120, ,000 Parking space income is recorded based on estimation of unit price levels for use fees that can be acquired stably over the medium to long term based on average use fees pursuant to the current lease agreement and use fees when it is assumed that parking spaces will be newly leased. Hourly parking income, antenna installation income, vending machine installation income, sign income, and other use fees are recorded as other income. (2) Potential Gross Revenue [(c)+(d)+(e)+(f)] 3,343,405 (g) Vacancy loss 136,205 Office Occupancy Rate 95% Retail Occupancy Rate 95% Hotel Occupancy Rate 100% Warehouse Occupancy Rate 95% Parking Occupancy Rate 85% Medium- to long-term occupancy rate levels are estimated based on occupancy rates and demand trends for similar properties in alternate competition relationships in similar regions within the same demand area for each use as well as past occupancy conditions and future trends relating to the subject property and vacancy loss is recorded based on those occupancy rate levels. With regard to other income, income amounts are estimated based on prospective amounts over the medium to long term, and consequently, vacancy loss is not recorded. 17/20

18 (3)Operating Expenses 2,135,768 Estimated by referring to past actual expenses and current cost as Maintenance Expenses 370,000 well as cost of similar properties, and considering the specific characteristics of the subject property Estimated based on past actual expenses and by referring to Utility Expenses 956,000 occupancy rates of rent spaces Estimated considering management and operating plan, the level of such costs of similar properties and an annual average of repair Repair Expenses 98,622 expenses in the engineering report by referring to past actual expenses Estimated considering the rate for similar properties and the Property Management Fee 89,738 specific characteristics of the subject property by referring fee rate based on property management agreement Estimated based on the average annual amount calculated based Tenant Advertisement Cost 21,487 on the anticipated turnover period of the tenant Tax and Public Dues 428,685 Estimated based on tax and public charge-related materials Estimated considering insurance rates based on insurance Casualty Insurance 13,236 contract and insurance rates of similar properties Other Expenses Reference Materials Portfolio summary after acquisition of the properties to be acquired Parking space sale settlement monies, administrative asset (utility 158,000 center) use fees, and so on are recorded as other expenses (4)Net Operating Incom [(1)-(3)] 1,071,432 Calculated by estimating the medium to long-term stable number of security deposit months based on current lease conditions and the number of security deposit months at the time of new agreement execution and multiplying that number by the (5)Profit from Managing Security Deposit 32,290 occupancy rate and by the investment yield. Investment yield considered appropriate for fund management during the deposit period is assessed as 2.0% with consideration to the interest rate levels of both fund management and procurement. Calculated under an assumption that expected expenditure is accumulated every term on average, considering the level of (6)Capital Expenditure 234,720 capital expenditure and age of similar properties and an annual average of renewal costs in the engineering report. Calculated under an assumption that expected expenditure is accumulated every term on average, considering the level of (7)FF&E Reserve 115,212 capital expenditure and age of similar properties and an annual average of renewal costs in the engineering report. (8)Net Revenue [(4)+(5)-(6)-(7)] 753,790 Calculated by adding or subtracting a spread derived from the hotel's competitiveness such as locational, building conditions as well as other conditions of the property to/from the standard (9)Cap Rate 6.0% yield set by the appraiser for each district, also considering future uncertainties and investment yields for transactions of similar properties, etc. DCF Method 12,600,000 Calculated comprehensively considering specific characteristics Discount Rate 5.8% of the property by referring to investment yields for transactions of similar properties, etc. Calculated comprehensively considering future trends of investment yields, risks in the property as an investment target, Terminal Cap Rate 6.2% general forecasts for economic growth rate and trends in property prices and rents, etc. by referring to investment yields for transactions of similar properties, etc. Cost Approach 14,100,000 Ratio of Land 25.3% Ratio of building 74.7% Including movable properties Any special considerations made in the reconciliation of estimated value Determined using the Income Approach Value with the Cost Approach Value used only for reference considering that the Income Approach Value is more convincing because the price determination process is accurately reproduced with respect to earnings. Notes: 1. This is the English translation of original Japanese documents and is provided solely for information purposes. If there are any discrepancies between the translation and the Japanese original, the latter shall prevail. 2. The original Japanese version of this announcement is being distributed today to the Kabuto Club, the Ministry of Land, Infrastructure, Transport and Tourism Press Club, and the Ministry of Land, Infrastructure, Transport and Tourism Construction Specialty Publication Press Club. 18/20

19 Portfolio summary after acquisition of the properties to be acquired *Properties to be acquired Property Acquisition (Note 2) % of Date (Note 1) Price (million yen) Total Acquisition Price Offices 6 Central December 1, 2001 Aoyama Suncrest Building Tokyo Wards February 2, , Round-Cross Ichi-bancho December 1, , Round-Cross Nishi Shinjuku December 1, , DT Gaien December 21, , Nihonbashi East Building December 21, , Yoyogi Forest Building December 21, , Round-Cross Minami Azabu December 21, , Round-Cross Akasaka January 10, , Round-Cross Mita January 10, , Shiba Daimon Building January 10, , Round-Cross Tsukiji January 10, , ORIX Shiba 2-chome Building September 29, , Aoyama 246 Building March 3, , Round-Cross Shinjuku April 28, , Seafort Square Center Building ORIX Akasaka 2-chome Building September 30, 2005 April 28, 2006 June December ,000 21, Logistics Facilities Round-Cross Shinjuku 5-chome April 26, , Nihonbashi Honcho 1-chome Building March , Round-Cross Shibuya March , ORIX Suidobashi Building March , ORIX Shinagawa Building June 27, , ORIX Real Estate Nishi Shinjuku Building March , OX Tamachi Building March 29, , MG Shirokanedai Building November 1, , SHIBUYA PINE Bldg. March 20, , MG Ichigaya Building April 4, , DUPLEX GINZA TOWER 2/11 September 30, , ARK Hills South Tower October 15, , KANDA MATSUNAGACHO BUILDING January 26, , Subtotal 197, Remaining Carrot Tower December 1, , Tokyo Wards Toyo MK Building December 1, , Beside Kiba December 21, , ORIX Ikebukuro Building April 18, , KN Jiyugaoka Plaza May 30, , ORIX Meguro Building July 29, , Akihabara Business Center June 1, , Subtotal 37, Other Parts of Neo City Mitaka December 1, , the Greater Tokyo Area Round-Cross Kawasaki April 27, , Omiya Miyacho Building March , Omiya Shimocho 1-chome Building March 29, , ORE Omiya Building April 15, , Subtotal 21, Other Areas Nagoya Itochu Building September 29, , ORIX Koraibashi Building April 27, , Lunar Sendai June , ORIX Nagoya Nishiki Building September 29, , ORE Sapporo Building October 1, , ORIX Kobe Sannomiya Building September 29, , ORE Nishiki 2-chome Bldg. October 1, , DOJIMA PLAZA BLDG. December 22, , PRIME SQUARE HIROSE-DORI April 1, , * Hamamatsu Act Tower April (scheduled) 11, * ORIX Yodoyabashi Bldg. May 2, 2016 (scheduled) 5, Subtotal 83, Offices Total 339, Other Parts of Toda Logistics Center March , the Greater Tokyo Area Ichikawa Logistics Center September , Iwatsuki Logistics Center October 1, , Subtotal 24, Other Areas Sakai Logistics Center North Building March 30, , Komaki Logistics Center June 30, , Subtotal 12, Logistics Facilities Total 37, /20

20 Property Acquisition (Note 2) % of Date (Note 1) Price (million yen) Total Acquisition Price Retail 6 Central Nihon Jisho Minami Aoyama Building October 31, , Facilities Tokyo Wards CUBE Daikanyama March 31, , aune Yurakucho April 1, , Cross Avenue Harajuku November 1, , J-ONE SQUARE January 31, , JouLe SHIBUYA April 1, , SO-CAL LINK OMOTESANDO October 1, , Kita Aoyama Building February 1, Subtotal 31, Remaining ORE Ikebukuro September 30, , Tokyo Wards Subtotal 6, Other Parts of aune Kohoku March , the Greater Tokyo Area aune Makuhari March , Maruetsu Sagamino March , CROSS GARDEN KAWASAKI March 29, , Tecc Land Totsuka (Land) April 1, , Clio Fujisawaekimae December 20, , Subtotal 32, Other Areas Kobe Momoyamadai Shopping Center (Land) March , Okayama Kume Retail Facility January , Home Center Musashi Sendai Izumi (Land) January , aune Sapporo Ekimae June , Morioka Minami Shopping Center Sansa July , GRAN MART Tegata November 1, AEON TOWN Sendai-Izumiosawa(Land) November 1, , Cross Mall Shimonoseki-Chofu January 10, , intervillage OH! MAGARI April 1, , Valor Suzuka Shopping Center April 1, , aune Sendai June 20, , Friend Town Fukaebashi (Land) September 30, , KONAMI SPORTS CLUB KORIEN October 30, , Subtotal 34, Retail Facilities Total 105, Residential 6 Central We Will Hatchobori June 1, , Properties Tokyo Wards Shibaura Island Air Tower July 28, , Belle Face Togoshi Statio May , Belle Face Meguro October 19, , Central Crib Roppongi April 1, , Subtotal 21, Remaining Belle Face Kamata June 1, , Tokyo Wards Belle Face Hongo Yumicho June 1, , Belle Face Mishuku March 30, , West Park Tower IKEBUKURO April 1, , Belle Face Higashijujo April 4, , Subtotal 32, Other Parts of R-Styles Musashi-Kosugi October 1, , the Greater Tokyo Area Subtotal 4, Other Areas Belle Face Osaka Shinmachi June 1, , Belle Face Amagasaki June 1, , Belle Face Kanazawa Kohrinbo November 1, , Subtotal 9, Residential Properties Total 68, Others Other Parts of Cross Gate January 10, , the Greater Tokyo Area GOOD TIME LIVING Shin-urayasu September , Subtotal 16, Other Areas VIA INN SHINSAIBASHI BLDG. September 30, , HOTEL KEIHAN SAPPORO September 30, , Richmond Hotel Yamagata Ekimae September 30, , Subtotal 7, Others Total 24, Grand Total 104 properties 574, Notes: 1. Acquisition price above refers to acquisition price (fractions rounded down) specified in the purchase and sale agreement. Consumption taxes are not included in the price. Acquisition price of Aoyama Suncrest Building refers to the acquisition price for ownership as of August 31, 2015 added by acquisition price for additional acquisition as of February 2, Fractions are rounded to two decimal places for the Percentage of total acquisition price. Totals for the Percentage of total acquisition price may not tally as a result of this rounding. 20/20